Accounting Services for SaaS Companies in Lithuania

AT A GLANCE

SaaS accounting differs from standard bookkeeping in two fundamental ways: subscription revenue must be recognised over the service period, not at the point of cash receipt, and deferred income from prepaid annual plans creates a balance sheet liability that must be correctly unwound monthly.
We provide SaaS-specific accounting from €250/month for companies without a VAT number and from €350/month for VAT-registered companies — with EU OSS filings included in the VAT retainer.
Monthly management reports for SaaS companies include the metrics that matter: MRR, ARR, net revenue retention, churn rate, gross margin, deferred revenue balance, and cash runway.
The Lithuanian IP box regime allows SaaS companies to tax qualifying software IP income at a reduced effective rate — we set up the income tracking framework from inception so the benefit is accessible from the first tax year.
All additional services — VAT registration, OSS registration, annual reports, employee registration — are available at the fixed fees listed on this page.

Accounting for a Lithuanian SaaS company covers everything a standard retainer covers — bookkeeping, VAT, payroll, annual financial statements — plus the SaaS-specific requirements that general accounting practices are not equipped to handle: subscription revenue recognition over the service period, deferred income accounting for annual prepayments, EU OSS VAT returns for cross-border digital services, and IP box income tracking where the regime applies. We provide SaaS accounting on a fixed monthly retainer from €250/month, with all statutory filings included and a SaaS-specific monthly management report delivered in English.

Why SaaS Accounting Is Different

The most common accounting problem we see when SaaS companies transition to us is simple: they have been accounting for subscription revenue incorrectly. A customer pays €1,200 for an annual subscription in January. The company records €1,200 as income in January. This is wrong — under accrual accounting principles, which Lithuanian accounting law requires, revenue must be recognised in the period to which it relates. The correct treatment is €100 per month over the 12-month subscription period, with the unearned portion sitting as deferred income on the balance sheet until each month is delivered.

This matters for several reasons. Incorrectly recognised revenue overstates the P&L in the month of cash receipt and understates it in subsequent months — distorting margin analysis, investor reporting, and the CIT calculation. Annual prepayments from multiple customers, all handled incorrectly, produce financial statements that bear no meaningful relationship to the company’s actual economic performance. For a SaaS company approaching investment or preparing for an acquisition, these distortions become expensive to correct under time pressure.

Revenue recognition — the core difference

SaaS subscription revenue is recognised ratably — evenly over the subscription period — unless there is evidence that a different pattern better represents the transfer of value. A monthly subscription is recognised in the month it covers. An annual subscription is recognised at €(total/12) per month. A usage-based component is recognised in the period the usage occurs. For SaaS products that include an implementation or onboarding element alongside the subscription, the allocation of revenue between these components may require additional analysis. We apply the correct recognition policy from the first transaction and document the accounting policy for audit and investor purposes.

Deferred income — the balance sheet impact

Every annual prepayment creates a deferred income liability on the balance sheet — cash has been received, but the service has not yet been delivered. For a SaaS company with growing annual plan adoption, the deferred income balance grows as the company scales. This is a healthy sign — it represents future committed revenue — but it must be correctly calculated and disclosed. An annual plan signed in October creates 10 months of deferred income at year end; in April, 8 months. The deferred income balance must be reconciled to the subscription ledger each month. Investors and acquirers examine deferred revenue closely as an indicator of revenue quality and customer commitment.

Churn and contract modifications

When a customer cancels mid-subscription, the accounting treatment depends on whether a refund is due. If the subscription was annual prepaid and the contract allows pro-rata refunds, the unearned portion is returned and the deferred income balance is reduced accordingly. If the subscription is non-refundable and the customer cancels early, the remaining deferred income is recognised in the period of cancellation. Upgrades, downgrades, and plan changes mid-period create proportional adjustments that must be tracked at the customer level. We handle contract modification accounting as part of the monthly reconciliation process.

VAT on digital services — OSS

SaaS subscriptions sold to consumers (B2C) in other EU member states are subject to VAT at the consumer’s country rate — not Lithuania’s 21%. This requires EU OSS registration and quarterly OSS returns that report sales by member state at the correct local rate. For B2B sales to VAT-registered businesses in other EU member states, the reverse charge applies — the Lithuanian company issues a zero-VAT invoice and the client accounts for VAT in their country. We configure the VAT treatment from setup and file quarterly OSS returns as part of the VAT-registered retainer at no additional charge.

IP box income tracking

For SaaS companies applying the Lithuanian IP box regime, qualifying IP income must be tracked separately from other income. The IP box requires that the portion of revenue attributable to the qualifying software IP is identified, and that the nexus ratio — the proportion of qualifying IP development expenditure to total IP development expenditure — is calculated to determine the portion of IP income eligible for the reduced rate. We set up the accounting categories and cost centre structure at incorporation to capture this data correctly from the first transaction, rather than reconstructing it retrospectively at year end.

What Our SaaS Accounting Service Covers

Our SaaS accounting retainer covers the full statutory accounting cycle plus the SaaS-specific elements that standard retainers omit. Every item below is included in the monthly retainer at no additional charge.

Monthly bookkeeping — SaaS-configured

All transactions are recorded under Lithuanian Business Accounting Standards with a chart of accounts configured for SaaS operations: subscription revenue by plan type, deferred income, implementation fees, usage-based revenue, refunds and credits, and the full cost structure including hosting, third-party software, and personnel costs by function (cost of revenue, R&D, sales and marketing, G&A). Stripe, Paddle, or other payment processor settlements are reconciled monthly to the subscription ledger and the bank account.

Subscription revenue recognition

Each subscription is tracked from the point of sale: subscription period, monthly recognition amount, and deferred income balance. Annual prepayments are correctly deferred and recognised ratably. Monthly subscriptions are recognised in the period they cover. Usage-based elements are recognised in the period of consumption. The monthly P&L reflects recognised revenue — not cash collected — providing an accurate picture of the period’s economic performance.

Deferred income reconciliation

The deferred income balance is reconciled monthly to the subscription ledger — confirming that the balance sheet accurately reflects all unearned subscription revenue at the month end. The reconciliation is included in the monthly management report, providing visibility into future committed revenue.

Lithuanian VAT return

Monthly or quarterly Lithuanian VAT returns are filed with VMI. For SaaS companies, this covers domestic Lithuanian sales and intra-EU B2B supplies under the reverse charge. The VAT return is filed through the EDS electronic declaration system before the statutory deadline. We notify you of the VAT balance due before each filing.

EU One Stop Shop (OSS) quarterly return

The OSS return covers all cross-border B2C digital service sales to EU consumers — reporting by member state at the applicable local VAT rate. We extract the country-level revenue data from your billing system or payment processor and prepare the OSS return for submission to VMI by the last day of the month following each calendar quarter. OSS registration is handled as a one-off service where not yet in place.

Payroll and SoDra declarations

For Lithuanian-based employees — engineers, product managers, customer success, or operations — monthly payroll is calculated and filed. Gross-to-net salary calculation, GPM at 20–32%, employee social contributions (19.5%), and employer contributions (1.77% + 3% health insurance) are included. The GPM313 declaration is filed with VMI and the SoDra employer declaration by the 15th of the following month.

Annual financial statements and CIT return

At year end, we prepare the full set of annual financial statements — balance sheet, P&L, and notes — with SaaS-specific disclosures including the deferred income movement, revenue disaggregation by plan type, and — where applicable — IP box income disclosure. The annual CIT return is filed with VMI by the 15th of the sixth month after year end, with the applicable rate (5% for qualifying small companies, 15% standard) confirmed at this stage.

Monthly management report — SaaS metrics in English

Each month we deliver a management report designed for SaaS operators and their investors — not a standard P&L. The report covers: MRR (monthly recurring revenue), ARR (annualised run rate), new MRR, churned MRR, expansion MRR (upgrades), net revenue retention (NRR), gross margin by revenue category, deferred revenue balance and movement, operating expenses by function, EBITDA, cash position, and cash runway at current burn rate. The report is formatted for sharing with investors and includes prior-period comparison columns.

The SaaS Metrics We Track and Why They Matter

Investors, acquirers, and sophisticated SaaS operators assess business performance through a specific set of metrics that standard financial statements do not surface. Understanding what each metric measures — and ensuring your accounting system is configured to produce it accurately — is one of the most commercially valuable things an accountant can do for a SaaS company.

Metric	What It Measures	Why Investors Look at It
MRR (Monthly Recurring Revenue)	Total monthly subscription revenue from all active customers at the end of the period	The primary indicator of business scale and growth trajectory
ARR (Annual Recurring Revenue)	MRR × 12 — annualised representation of current subscription revenue	Standard SaaS valuation benchmark; used to calculate revenue multiples
New MRR	MRR added from new customer acquisitions in the period	Growth rate indicator; shows whether the company is acquiring customers at sufficient pace
Churned MRR	MRR lost from customer cancellations or downgrades in the period	Retention health; high churn destroys growth regardless of new customer acquisition
Expansion MRR	MRR added from upgrades, upsells, or seat expansions from existing customers	Product-market fit indicator; expansion shows customers find increasing value in the product
Net Revenue Retention (NRR)	Revenue from existing customers at end of period vs. beginning (including churn and expansion)	NRR >100% means the base grows without new customers; the gold standard for SaaS health
Gross Margin	Revenue minus cost of revenue (hosting, third-party software, customer support costs)	SaaS gross margins should be 70–85%+; indicates scalability of the revenue model
Deferred Revenue	Cash received for subscription periods not yet delivered	Forward revenue visibility; annual plan adoption indicates customer commitment
Cash Runway	Current cash balance divided by monthly net cash burn	Critical for pre-revenue and growth-stage companies managing capital efficiency

Why MRR ≠ revenue on the P&L

A common source of confusion for SaaS founders is the difference between MRR and the revenue figure on the P&L. MRR is a forward-looking metric — it represents the value of all current active subscriptions, expressed as a monthly figure, regardless of when they were billed or when revenue is recognised. The P&L revenue figure is the amount recognised in the period under accrual accounting — which for annual plans is 1/12 of the annual fee per month, not the full amount received. Both are important, but they measure different things. Investors typically focus on MRR and ARR; the statutory accounts show recognised revenue. Our management report provides both, clearly labelled.

The Lithuanian IP Box Regime for SaaS Companies

The Lithuanian IP box regime (Intelekto nuosavybės pajamų apmokestinimo lengvata) allows income derived from qualifying intellectual property — including software copyright — to be taxed at a reduced effective corporate income tax rate. For SaaS companies whose revenue is primarily derived from licensing access to software they have developed, the IP box represents a meaningful tax planning opportunity when structured correctly from the outset.

What qualifies

Qualifying intellectual property for the Lithuanian IP box includes: patents, utility models, plant variety protection rights, orphan drug designations, and — importantly for SaaS companies — software copyright. Income from licensing, selling, or commercially exploiting the qualifying IP qualifies for the reduced rate. The SaaS subscription fee, to the extent it is attributable to the software licence component (as opposed to hosting, support, or other services), represents qualifying IP income.

The nexus approach — how the benefit is calculated

Lithuania applies the OECD-aligned nexus approach. The IP box benefit is not available on 100% of qualifying IP income — it is available on a portion determined by the ratio of qualifying R&D expenditure (incurred by the company directly or through unrelated parties) to total R&D expenditure. In practice, for SaaS companies that develop their software in-house, the nexus ratio is typically high, making the majority of IP income eligible for the reduced rate.

What we set up from inception

To access the IP box benefit, the accounting records must separately identify: (1) qualifying IP income — the portion of subscription revenue attributable to the software licence; (2) qualifying R&D expenditure — costs directly attributable to the development of the qualifying IP; and (3) total R&D expenditure — including any costs that do not qualify under the nexus calculation. We configure the chart of accounts and cost centre structure at incorporation to capture this data automatically. Retroactively constructing the required records from inadequate accounting records is time-consuming and sometimes impossible — setting up correctly from day one costs nothing extra and preserves the full benefit.

IP box — realistic expectations

The IP box is not a magic tax rate of 0%. It is a reduction in the effective rate on qualifying IP income, calculated based on the nexus ratio and the proportion of subscription revenue attributable to the software licence component. The actual tax saving depends on the company’s revenue mix, R&D cost structure, and the applicable CIT rate (5% or 15%). We model the expected IP box benefit for each SaaS client as part of the onboarding process — setting realistic expectations before the first CIT return is due.

SaaS Accounting Prices

All accounting services are priced at fixed monthly retainers for ongoing work and fixed fees for one-off engagements. No hourly charges, no billing for routine questions, no surprise invoices.

Monthly retainer options

Accounting Service — Company Without VAT Number · Standard

from €250 / month

Monthly bookkeeping — subscription revenue recognition, deferred income treatment
Multi-currency reconciliation — payment processor settlements in EUR, USD, GBP
Quarterly advance CIT payments — calculated and filed with VMI
Annual financial statements — balance sheet, P&L, notes with SaaS disclosures
Annual corporate income tax return — 5% or 15% rate as applicable
JAR annual data confirmation
Monthly SaaS management report — MRR, ARR, NRR, deferred revenue, cash runway

Accounting Service — Company With VAT Number · Standard + VAT

from €350 / month

Everything in the non-VAT package, plus:
Monthly or quarterly Lithuanian VAT return — domestic and B2B reverse charge
EU OSS quarterly return — cross-border B2C digital services by member state
Input VAT reclaim on eligible business purchases (hosting, software, professional fees)
VAT and OSS position summary in the monthly management report

What determines the final monthly fee

Starting rates apply to companies with standard transaction volumes. The final retainer reflects the number of subscription transactions, payment processor settlement files, team size (for payroll), and whether IP box tracking is required. We assess your expected volume and complexity at onboarding and quote a fixed monthly rate — always fixed, never hourly.

Additional Services and Fixed Fees

Registration and one-off services

Service	Price
Assistance in registering VAT number (for residents)	€800
Assistance in registering VAT number (for non-residents)	€1,500
EU OSS registration with VMI One-off registration; OSS filings included in VAT retainer thereafter	€400
Annual report for a Lithuanian company	from €650
Individual tax consultation	from €300
IP box eligibility assessment and accounting setup Nexus ratio analysis, chart of accounts configuration, and IP income tracking setup	€500
Winding up a Lithuanian company	from €850

Per-item and ad hoc services

Service	Price
Accounting of additional primary documents Sales and purchase invoices in any currency	€7 / invoice
Accounting of bank transaction in any currency	€1 / transaction
Employee registration in Social Insurance Fund (SoDra)	€50 / person
Wage calculation for additional employee Admission, dismissal, vacation, maternity, unpaid leave, declarations	€70 / month
Other work unspecified in contract	€120 / hour
Urgent work fee Applied to base invoice for urgent requests	50% surcharge

Getting Started: SaaS Accounting Onboarding

We onboard new SaaS accounting clients within 5–7 business days. The onboarding process is structured to configure the accounting system correctly for subscription revenue recognition, deferred income, and — where applicable — IP box tracking before the first transaction is recorded.

Initial call and scope confirmation We discuss your pricing model (monthly, annual, usage-based, or mixed), billing system (Stripe, Paddle, Chargebee, etc.), whether you sell B2B, B2C, or both, the countries you sell to, your current team size and payroll obligations, and whether you intend to apply the IP box. We confirm the retainer tier, identify OSS registration needs, and scope the onboarding work.

Accounting system configuration We configure the chart of accounts with SaaS-specific categories: subscription revenue by plan type, deferred income, implementation fees (if applicable), cost of revenue, R&D, sales and marketing, and G&A. For IP box clients, separate cost centres for qualifying and non-qualifying R&D expenditure are created at this stage. The management report template is configured to pull MRR, ARR, NRR, and deferred revenue from the accounting records automatically.

Billing system integration We confirm how subscription data flows from your billing system into the accounting system — either through a direct integration (Stripe → accounting software) or through monthly export and import of transaction reports. The key data points required for correct revenue recognition are: subscription start date, subscription end date, plan amount, and payment date. We configure the data flow to capture these for every transaction.

VAT and OSS registrations (if needed) If the company is not yet VAT-registered, we file the VMI registration application. If OSS registration is needed for B2C digital services, we complete that simultaneously. We confirm the correct VAT treatment for each revenue stream — domestic, B2B reverse charge, and B2C OSS — and document the policy before the first VAT return is due.

Prior period catch-up (if needed) If the company has been operating without correct revenue recognition, we scope and cost the catch-up project. For SaaS companies with significant deferred income that was not correctly accounted for, the catch-up involves reconstructing the subscription ledger from billing records and adjusting the prior period financial statements. We scope and cost this before beginning.

Monthly cycle begins From the first full month, the accounting cycle runs automatically. Billing system data arrives at the agreed interval, we process revenue recognition, reconcile deferred income, close the month, and deliver the management report — MRR, ARR, NRR, deferred revenue, and cash position — by the 15th of the following month.

Frequently Asked Questions

MRR (Monthly Recurring Revenue) is a business metric — it represents the current value of all active subscriptions expressed as a monthly figure, regardless of when they were billed or when revenue is recognised. The P&L revenue figure is the amount of revenue recognised in the period under accrual accounting — for annual plans, this is 1/12 of the annual fee per month, not the full amount received. An annual plan worth €1,200 billed in January contributes €100 per month to recognised revenue but €1,200 to MRR from the moment the subscription is active. Investors focus on MRR and ARR because they reflect current subscription value. The statutory accounts show recognised revenue because that is what accounting law requires. Our management report provides both.

If you sell exclusively to VAT-registered businesses in Lithuania or other EU member states, the reverse charge mechanism applies — the buyer accounts for VAT in their country, and you issue invoices without charging VAT. In this scenario, VAT registration is not mandatory until Lithuanian revenue from domestic VATable sales exceeds €45,000 per year. However, voluntary VAT registration from the outset is advisable because it allows you to reclaim input VAT on your own business purchases — hosting costs, software subscriptions, professional services — which can represent a meaningful monthly saving for a SaaS company with significant infrastructure costs. We advise on the optimal VAT registration timing for your specific revenue mix.

No revenue is recognised during a free trial period — there is no performance obligation being fulfilled that gives rise to revenue. When the trial converts to a paid subscription, the subscription start date is the conversion date, and revenue recognition begins from that point. If a credit card is required at trial sign-up and the first payment is automatically taken at conversion, the cash receipt date and the revenue recognition start date align. If an annual plan is offered at conversion with a discounted first year, the recognition is over the 12-month paid period, with any annual prepayment deferred and unwound monthly.

Each subscription is translated to EUR at the exchange rate on the date of each monthly recognition entry — not the exchange rate on the date of cash receipt. For annual plans billed in USD, each monthly €(USD amount ÷ 12 × monthly rate) recognition entry uses the EUR/USD rate for that month. Unrealised FX gains and losses arise when the recognition rate differs from the billing rate, and these are recorded separately. The deferred income balance is retranslated at the closing rate each month, with any translation difference recognised in the P&L. We handle multi-currency recognition automatically as part of the monthly close process.

The IP box reduces the effective rate on qualifying IP income — typically the portion of subscription revenue attributable to the software licence — by applying a preferential rate rather than the standard 5% or 15% CIT. The actual saving depends on the nexus ratio (how much of your R&D was done in-house or with unrelated third parties) and the proportion of revenue that qualifies as IP income. For a SaaS company with high in-house R&D and predominantly software-licence revenue, the majority of income could qualify for the reduced rate. We model the expected benefit at onboarding based on your specific cost and revenue structure and set up the tracking framework to make the benefit quantifiable at year-end CIT return.

When a customer cancels an annual subscription, the accounting treatment depends on whether a refund is contractually due. If the contract is non-refundable: the remaining deferred income is recognised immediately in the period of cancellation — the performance obligation is extinguished early, and the remaining unearned amount becomes earned. If the contract provides for a pro-rata refund: the refund amount is paid to the customer, the deferred income balance is reduced by the refund, and no additional revenue is recognised. Your subscription terms should clearly specify the refund policy, as this determines the accounting treatment of cancellations.

Yes. For SaaS companies in a fundraising process, we prepare investor-ready materials: a management accounts pack with MRR waterfall, NRR analysis, cohort data, gross margin by segment, and cash runway modelling. We also prepare the statutory financial statements that investors require as part of due diligence, and a revenue reconciliation that bridges the MRR metric to the statutory revenue figure — addressing the question investors always ask when the two numbers differ. For companies that need a forward-looking financial model (MRR projections, scenario analysis), this is an additional engagement quoted on request.

Ready to set up SaaS accounting correctly?

Contact us to discuss your pricing model, billing system, and current accounting setup. We will confirm the correct retainer, identify OSS and IP box considerations, and begin the accounting setup within 48 hours of your instruction.